Crude has rallied from lows of under $65 a barrel in May to above $85 this month on a production cut of a million barrels per day pledged by the Saudis for July and August. On Thursday, a day before members and allies of OPEC gathered for a virtual meeting, the Saudis announced another export reduction of similar size for September.
Responding to that, US West Texas Intermediate (WTI) crude, the brand of oil that is produced in the state of Texas, settled Friday’s trade up $1.27, or 1.6%, at $82.82 per barrel. The session high for WTI was $83.23, a peak not seen since early April. For the week, the US crude benchmark rose 2.8%, adding to July’s gain of nearly 16%.
The London-based Brent crude, reference grade of oil produced in the North Sea, settled its US trading session up $1.10, or 1.3%, at $86.24 per barrel. The intraday peak for Brent was $86.64 - the highest since mid-April. For the week, the global oil benchmark gained almost 2%, after running up nearly 14% for July.
"Oil is at a three-month high and starting to attract more buyers," Edward Moya, analyst at online trading platform OANDA, said. "The crude price rally could continue since the US economy remains resilient and if China’s data next week confirms that part of the world’s crude demand is growing. The $85 level should provide key resistance for WTI crude, but if that doesn’t slow the rally, every trader will have their eyes on the $90 level."
In addition to Saudi Arabia announcing a production cut, Russia also announced that it would reduce its output by 300,000 barrels per day in September, adding to the bullishness of the oil market.